Chinese industrial profits narrow decline in March
PROFITS at China’s industrial companies dipped 0.4 percent from a year earlier in March, an improvement from the fall of 4.2 percent in the first two months, the National Bureau of Statistics said yesterday.
Cheaper raw materials, improved investment returns and a recovery in the energy sector helped to narrow the profit decline, a bureau analyst said, but he warned manufacturers still face challenges.
The industrial companies made total profits of 508.6 billion yuan (US$82 billion) in March, bringing net earnings in the first three months to 1.25 trillion yuan, down 2.7 percent from a year earlier.
Of the 41 industries tracked, 30 posted higher profits, data showed.
He Ping, a researcher at the bureau, said the lower price of raw materials helped boost profits while the recent cut in interest rate also trimmed operational costs for the firms.
“The recovery in the energy sector is another important source of better profit,” He said.
But he warned that overall conditions are still severe due to weak demand. “Poor sales have added pressure on inventory, while it in turn slows cash flow,” He said.
State-owned enterprises were the worst earnings performer as their net profits fell 29.3 percent year on year in the first quarter, while those of private companies rose 6.8 percent and overseas-invested firms added 6.2 percent.
Earlier data showed China’s manufacturing sector may worsen again in April as the HSBC Flash China Manufacturing Purchasing Managers’ Index fell to a one-year low.
The index, the earliest available indicator of operating conditions at industrial companies, fell to 49.2 in April from the final reading of 49.6 in March, indicating contracted activity in manufacturing.
China’s economic growth slowed to 7 percent in the first quarter, the weakest quarterly expansion in six years, which has resulted in surprise cuts in bank reserve requirement ratio and interest rates.
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